All Forum Posts by: John Doyle

Under what circumstances would the income be treated as capital gains?

I am definitely going to talk this over with a CPA, but thanks for your help!

What rate is passive income taxed at?

I see the IRS regs about rental activities being defined as passive, but I don't see anything about a lower rate.

I just see that this "passive activity" distinction subjects us to "passive activity loss rules", which limit our ability to offset other types of income with net passive losses.

But even that limitation is negated for us because we fall into the "active participation" exception, so we can offset our regular earned taxable income dollar-for-dollar with losses from our rental (if I understand the regs correctly).

My understanding is that whatever "net income" I have from my rental is taxed at whatever income tax bracket my wife and I are in.

My wife and I file jointly and our taxable income puts us in the 25% bracket, so my understanding is that if we make say $4000 net income from our duplex then we pay $1000 in fed taxes on that.

Are you saying that is incorrect?

Thanks!

I love maxing out our tax-advantaged accounts (my 401k at work and Roth IRAs for my wife and myself).  

Usually we have a few thousand dollars each year to invest after we max out these accounts (and it usually just goes into a taxable brokerage account where we use it to buy Berkshire Hathaway or Markel or some other stock that does not pay a dividend).

That extra money was actually how we ended up buying this duplex - thought it might be a good way to diversify our investments.

I was wondering if I could use net income from our duplex (assuming we have net income, and by net income I mean what we report to the IRS) to fund a solo 401k or some other kind of tax-advantaged plan?

I understand that these plans are for self-employed individuals or those running a side business of some kind.  Does running a rental property qualify as "self-employment"?

Note: I am not interested at all in using a retirement plan to BUY more properties...just to put money into it a tax-advantaged way and then using that money to buy stocks/ETFs.

Thanks!

Thanks for all the help!

I should have said that in addition to not paying for possibly unnecessary software, I am really trying to NOT hire an accountant, but this may be extremely unwise.

I would certainly be willing to pay an accountant now and then just to look things over.

Again I only have one property.  All I want to do is do my taxes correctly.  

Has anyone tried turbo tax to handle their rental property and thought it was inadequate?

Just asking here, but why would I need income statements and balance sheets?

No I don't need tenant management at all.  Accounting/tax prep is the only thing I am worried about.

We have had our duplex for one year now, and aren't looking to acquire any more properties.

Maybe this is a dumb question, but do I need accounting software (Quickbooks, etc.) or can I just do our taxes with Turbo Tax Premiere (Investments and Rental Property) and call it good?

I keep good records of everything I spend on the property, every dime in and out. I don't care about calculating ROI or doing any property management functions.

Thanks!  

Both properties are priced at $80 per square foot, which I think is pretty good because they are both in great shape (I would be putting nothing into them in the way of improvements as they have both been remodeled recently).

They are both located in the Edgemere neighborhood, which is on the north side of Crown Heights. A nice area with a good mix of rentals and owners.

Both have tenants (no vacancies) and according to the owners, finding tenants has never been an issue at all.

Both properties were built in 1954.

Another big question I have is what kind of rent amount per square foot should I be asking? What are people getting for comparable properties in my area?

Both of the owners say they could probably be getting more than they are charging (which makes me the "bad guy" if I raise the rents on their current tenants, which I hate but I will be cash flow negative to the tune of about $1000 per month in the larger property - the owner wants 30% down and a payback period on the rest of 7 years).

Hi, my name is Corbyn Doyle and my wife and I live in central OKC.

We are totally new to REI, and have come to this site looking for helpful knowledge in assessing a couple of deals that have been offered to us in our neighborhood.

They are both owner-financed deals on rental properties just down the street from us (one is a duplex and the other a duplex with two garage apartments).

Both deals have kind of fallen in our lap (we weren't looking for investment properties) because of our friendships with the two owners of the properties (a different owner for each property, unrelated and unknown to each other).

We basically need to know (1) what kind of return on investment we could expect from the properties (given certain known variables) and (2) what sort of pitfalls to look out for in owner-financing.

Thanks for any help you can provide!